Under normal circumstances, both companies would be dead man walking. Their only hopes would be for some shark to swoop in and buy them out. In this case, none of that will likely happen.

Our housing market is simply in no position to have these two go under. They are now owned by the federal government and will continue to be owned by the feds. This will make the process of transfer to private hands that much more difficult. Of course, that's so far in the future that we have many more worries before that anyway.

These companies are bleeding so much red that they no longer qualify for inclusion the NYSE. If they were a normal company, bankruptcy or outright dissolvement would follow soon. Now, this action is likely a precursor to more federal bail out dollars.

U.S. housing starts fell more than expected in May to their lowest level in five months, a government report showed on Wednesday, as a popular homebuyer tax credit that had buoyed construction activity over the past two months expired.

That's the latest evidence that housing continues to struggle. Equities are down 1% on the news.